China, Pakistan sign gas pipeline deal key to Iran imports

China has signed a deal with Pakistan to construct a gas pipeline for Iran imports.

China has signed an initial agreement with Pakistan to construct a pipeline crucial for importing natural gas from Iran. The agreement was signed during the Chinese President Xi Jinping’s visit to Islamabad.

The pipeline will start from the southern port of Gwadar to Nawab Shah District in the southwest of Pakistan.

It will be extended to the border with Iran after the US engineered sanctions against Iran are lifted.

This has now officially paved the grounds for the resumption of exports of Iranian natural gas to Pakistan – a project that has been delayed for years.

Known as the Peace Pipeline, the project is meant to transfer natural gas from Iran’s energy hub of Assaluyeh to Pakistan. Iran has already taken the pipeline to the border with its eastern neighbor. However, Pakistan had so far failed to construct its share of the project due to what officials say has been a lack of funds.

The pipeline from Iran will bring much-needed gas to Pakistan, which suffers from a crippling electricity deficit because of a shortage of fuel for its power-generation plants. Pakistan has been negotiating for months behind the scenes for China to build the Pakistani portion of the pipeline, the Journal added.

The gas pipeline deal was part of a package of economic agreements that President Xi signed with Pakistan's Prime Minister Nawaz Sharif on Monday. The total value of the package is reported to have been around $45 billion and is meant to create what is now known as the China-Pakistan Economic Corridor (CPEC).

The CPEC links China's far-western region to Pakistan's south-western Gwadar port on the Arabian Sea through Kashmir and is a massive project of road, rail, energy schemes, pipelines and investment parks.